Head of Macro Analysis
Summary: In today’s ‘Macro Chartmania’, we focus on the U.S. 30-year mortgage rate. In January 2022, it stood at 3.1%. It is now above 4%. This is only the beginning. Many U.S. households are not able to buy at the 4% rate anymore. This worsens the issue of housing affordability in the United States.
Access this week's full edition of Macro Chartmania composed of more than 100 charts to track the latest macroeconomic and market developments. All the data are collected from Macrobond and updated each week.
Housing affordability continues to be a major challenge in the United States. Home prices keep jumping (+15% year-over-year to $357,300 on average) while sales continue to fade and the inventory of unsold homes increases. Buyers are trapped. They face higher difficulties resulting both from sustained price increases and rising mortgage rates. Many of them who managed to get a 3% mortgage rate are no longer able to buy at the 4% rate. Exactly one year ago, the average rate on the 30-year loan was at around 3%. It now stands at 4.5%. This is the highest level since December 2018. The average rate on 15-year, fixed-rate mortgages, which is popular among those refinancing their homes, is up too. It is hovering around 3.4% instead of 3.09% one week ago. This is only the beginning. Mortgage rates are highly correlated to the Federal Reserve’s benchmark short-term interest rate. We expect the Federal Reserve to hike the rate by 400 basis points during this cycle in order to fight inflation. This would be similar to the previous tightening cycles which took place since 1985. We could, therefore, see the 30-year mortgage rate beyond 5%. This would be the first time since 2010. Social consequences would be massive (homebuyers dropping out from the market, breach of the social contract etc.). Owning a home is now a distant dream for a growing number of Americans.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
